Can We Continue to Sail the Trade Winds Without a Rudder?

It is an exciting time again in the international trade world. We soon should have a very experienced trade negotiator as our next U.S. Trade Representative (USTR). And, no matter what industry sector a business may operate in, USTR is negotiating an ambitious trade initiative that will facilitate market access for that company. However, most of these initiatives discussed below may never materialize without the renewal of Trade Promotion Authority (TPA).

Trade Initiatives in the Works Will Empower the U.S. Economy if a High Standard is Maintained, Which Requires Renewed TPA Authority

Formal negotiations between the U.S. and EU governments on a massive Transatlantic Trade and Investment Partnership (TTIP) will begin in early July. In the meantime, negotiators are arduously preparing based on mutually agreed objectives. Several weeks ago Intel filed comments in response to USTR’s request for input on how to maximize the value of TTIP. Our comments suggest that the U.S. and EU develop an Innovation Initiative Framework that sets a global standard on how to fully liberalize trade in ICT goods and services to spur significant economic growth. On May 16th, I testified in a U.S. House Ways & Means (W&M) Trade Subcommittee hearing on TTIP on behalf of the Coalition of Services Industries and the Business Coalition for Transatlantic Trade. Among other points, our written submission explains in detail why negotiators need to liberalize all modes of services in all sectors, especially digital services that are experiencing exponential growth.

Speaking of services, the nearly two dozen countries that have begun negotiating the new Trade in International Services Agreement (TISA) convened in Geneva in early May to discuss liberalizing restrictions on the movement of people across borders. The next negotiation session at the end of June likely will focus on cross-border data flows and state-owned enterprises.

Last week, the 17th round of negotiations on the Trans-Pacific Partnership Agreement concluded in Lima. Intel has participated as a stakeholder in most of the rounds held so far, pushing for enhanced protection of trade secrets, a right to cross-border data flows, reduced regulation of commercial encryption technologies, and other provisions to enable innovation to flourish.

This week, another round of negotiations is being held on expanding the zero tariff Information Technology Agreement. Intel and other businesses are providing support for broad coverage of ICT products, as the data are clear: eliminating tariffs increases demand for ICT, and the more dissemination and use of ICT products throughout an economy, the greater the productivity and innovation gains. As this effort amends an existing agreement, it likely is the only trade initiative in the works that can be concluded without TPA.

TPA Must be Renewed and Modernized ASAP

Most of the new U.S. trade initiatives require renewal of TPA, which expired in 2007. Without TPA, trading partners have little incentive to put their best offer on the table or accept the tough provisions that USTR is currently negotiating for the benefit of U.S. workers, business and consumers. Why would a trading partner ever agree to make difficult concessions – e.g., remove its favorite, novel non-tariff barriers — since, absent TPA, the U.S. Congress can easily alter the agreements that USTR negotiates and ask for more after negotiations are concluded?

TPA serves as the rudder for U.S. trade policy. A strong TPA will set forth key negotiating objectives and provide processes for Executive-Congressional consultation to ensure USTR has the authority and ability to negotiate trade agreements that are highly relevant to U.S. interests.

Federal legislators with trade responsibilities are anxious to get TPA done. Back in February, W&M Trade Subcommittee Chairman Nunes announced at a meeting of the National Association of Manufacturers (NAM) how important it was to get TPA done.

In the Senate, Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch already are conferring on provisions for a TPA bill. It is time.

The negotiating objectives in the expired TPA, 19 USC § 3802, need to be updated by addressing new trade distortions. These should include, among others, cyber theft of trade secrets; restrictions on digital services and data flows; and emerging localization barriers that condition market access on developing domestic intellectual property, R&D or manufacturing. We will address these and other critical objectives in detail in a subsequent blog post.